1. DRAFT e-Government Procurement in ECA region : Current Status and Way Forward WORK IN PROGRESS Fiduciary Forum Electronic Government Procurement Session Gurcharan Singh and S. Janakiram World Bank The views and opinions expressed in this presentation are the author’s own and should not be attributed to the World Bank, its management, its Board of Directors or the countries they represent.

2. 1 OVERVIEW Why develop E-Government Procurement in ECA countries? Main challenges faced in ECA countries Current status of E-GP in ECA countries – Emerging good practices in ECA countries Way forward – Opportunities Role of Bank

3. 2 Current Status of Public Procurement Public Procurement Constitutes 10 to 15 percent of GDP … US$millions per year – Goods…US$ millions – Works… US millions – Services..US$millions Over 500 Government Ministries/Agencies/Autonomous Bodies are involved in Public Procurement Transactions are increasing every year …over 1000 to 10,000 per year for different public sector institutions Employs …. Professionals and support staff with little or no training in internationally accepted Public Procurement policies, procedures, processes, methods and electronic systems Centralized and Decentralized public procurement systems are in use Low value, high volume purchases are primarily executed by decentralized public sector institutions High value, low volume are primarily executed through centralized public procurement agencies (such as State Procurement Agencies)

4. 3 Why Develop E-Government Procurement in ECA countries? Current procedures of procurement in most ECA countries : – do not provide potential suppliers with full information concerning total public-sector demand; –do not provide government purchasing units with information on all potential suppliers for all types of goods, works and services needed by the Government institutions, and –do not provide adequate means for the general public to provide feedback and oversee procurement processes; Low to High incidence of Corruption in Public Procurement Greater transparency in procurement is a current priority of many of the ECA countries and commitment to reform at the highest levels of Government leadership is beginning High transaction costs in procurement processes

5. 4 Why develop E-Government Procurement in ECA countries?..contd.. Many countries are initiating major reforms in public procurement mostly led by the Ministry of Finance and Economy; Level of investments in both information technology hardware and institutional development areas is on the increase and provides investment opportunities E-commerce legislation, such as provision for buying and selling on-line Electronic signatures, digital certificates etc, exists and/or is under development Varying degrees of trained manpower with countries such as Armenia, Estonia, Hungary, Latvia, Romania, Poland,Ukraine, Russia possessing a strong comparative advantage in terms of trained manpower in information technology, software systems

6. 5 Main challenges in E-Government Procurement in ECA Region Internationally accepted procurement policies, procedures, guidelines and processes are yet to take root in most ECA countries –Low to medium levels of understanding among procurement professionals –Adoption rates of internationally accepted policies are still low E-Government Procurement Strategy and Action Plan –Is under development in most countries Legislation –For enabling E-Government is evolving and is in an early stage in most countries Information technology infrastructure –Low penetration rates of internet connectivity –Low levels of usage of internet by the private sector Private sector –Rate of private sector development is slow –Inadequate number of bidders from the private sector competing for Government contracts Change management and adoption of new ways of doing business –Paper driven processes in all stages of procurement –For enabling E-Government is evolving and is in an early stage in most countries

7. 6 E-GOVERNMENT PROCUREMENT IN ECA REGION – APPROACHES Pre-conditions for launching E-GP –Committed leadership and E-GP champions at the policy and operational levels –Enabling legislation in place to permit E-Government Procurement –Drafting the Road Map for launching of E-GP –Clear understanding and adoption of internationally accepted procurement policies, procedures, guidelines and processes –Development of adequate number of suppliers of goods, contractors for works and consultants for rendering services in the private sector to ensure competition –Reliable internet connectivity at affordable rates –Developing confidence and trust within the user community to carry out business with the Government using E-GP systems Approaches used by selected countries –Step by step approach Case of Azerbaijan, Armenia and Georgia –Piloting E-Government Procurement in – Ministry of Finance – successful example of Latvia

8. 7 Enabling Environment Creation of enabling environment for private sector and citizen organizations to provide services in a fair and competitive manner E-GP tendering Customized search facilities Bidding documents on internet Electronic bid submission E-Purchasing On-line purchasing and E-Transactions Customized services E-Contract Management Contract execution management Contract capacity consolidation Linking E-GP systems with Financial Management Systems – to achieve an E-enabled “Procure to Pay” cycle Way Forward - What we hope to see in the years ahead?

9. 8 Areas of Bank assistance – through IDF grants and Public Sector Reform Projects Development of E-Government Procurement Strategy and Action Plans Capacity Building in all aspects of E-GP Sharing of knowledge and expertise of E-Government Procurement processes in different countries Upgrading of the present systems in E-Government Procurement systems and building on systems developed by other donors Collaboration with EU and other donors in developing common standards, procedures, framework, measurement indicators, training modules, IT infrastructure, etc Strengthening administrative capacity and support for legislation for E-GP in compliance with EU requirements

10. 9 Issues Multiplicity of institutions involved in the design and implementation of E-Government Procurement systems Lack of qualified procurement professionals with good understanding of internationally accepted procurement procedures, guidelines and processes Sequencing of E-GP steps Change management – new ways of doing business – from paper to electronic Public Private Partnership in choice of E-GP software –Adapt off the shelf software – customize –Outsource with well known E-GP software vendors, such as Ariba, ePlus, HP, IBM, Ketera Technology, Microsoft, Oracle, PeopleSoft, SAP, SciQuest, etc –Use Open Source Software Low levels of internet penetration and use of computer among private firms to conduct business Limited number of suppliers, contractors, providers of consulting services Sustainability – how to move from free to fee based E-GP services?

11. 10 Many thanks for your attention Comments, suggestions welcome.. Please send to: GSingh@worldbank.org SJanakiram@worldbank.org